New defence procurement policy delayed, again

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The much-awaited revised policy for defence procurement and production (DPP), which was expected to be released earlier this week ahead of the Berlin Air Show, has been delayed further as some of the key issues still remain unresolved.

Highly placed sources in the defence ministry told FE the new policy, which had almost been finalised, is likely to be announced in June or later.

Infact, recently, Rao Inderjit Singh, minister of state defence had clarified, “The idea is to come out with a comprehensive DPP-2008. It has been built into the policy (DPP-2006) that every two years we will make what changes are necessary. So we will have one in 2008; hopefully we will have the next one in 2010. It’s a continuous process of improvement.”

The defence procurement policy, 2008 will be be promulgated by defence minister AK Antony, after which the draft has to be approved by the defence acquisition council (DAC).

There was a flurry of activity in the ministry of defence as the new policy was expected to be cleared before the ILA-Berlin 2008, which is scheduled from May 27 to June 1, as the the top officials will all be present at the show and questions relating to the new policy are expected to come up.

Led by the defence minister Antony, minister of state for defence production Rao Inderjit Singh, defence secretary Pradeep Kumar, director-general (acquisitions) Shashi Kant Sharma and the chairperson of India's top offsets body, DOFA, Satyajeet Rajan, Air Chief Fali Homi Major and other senior officials will all be present at the show.

Senior officials have maintained that there is a need to have a comprehensive policy clarifying all kinds of issues relating not only to offsets policy but also to foreign direct investment (FDI) in the defence sector and the promotion of indigenous defence production.

However, there are issues like the enhancement of the offset clause from 30% to 50%, the raising of the FDI limit from the present 26% to 49%, and of course, the banking credits are some of the issues that are holding up the announcement of the new DPP ahead of the show.

Infact at the show, Germany’s Federal Chancellor Angela Merkel accompanied by Antony, will open the International Aerospace Exhibition ILA2008 on May 27 during a 90-minute tour of the event.